AMD’s Q3 2023 Financials Reveal 4% YoY Revenue Surge, Promising Growth Trend

AMD reported impressive revenue growth and solid performance across its various segments in the third quarter of 2023, with revenue reaching $5.8 billion and a non-GAAP gross margin of 51%.

Record-breaking sales of server processors
Significant growth trajectory of their data center business
Expansion of their 4th Gen EPYC CPU portfolio

AMD, the semiconductor company, has reported its revenue for the third quarter of 2023, showcasing impressive growth and solid performance across its various segments. The company’s revenue reached $5.8 billion, with a gross margin of 47%, operating income of $224 million, net income of $299 million, and diluted earnings per share of $0.18. On a non-GAAP basis, the gross margin stood at 51%, operating income at $1.3 billion, net income at $1.1 billion, and diluted earnings per share at $0.70.

Dr. Lisa Su, the Chair and CEO of AMD, attributed the strong revenue and earnings growth to the high demand for their Ryzen 7000 series PC processors and record-breaking sales of server processors. She also highlighted the significant growth trajectory of their data center business, driven by the strength of their EPYC CPU portfolio and the increasing shipments of Instinct MI300 accelerators to support various deployments with hyperscale, enterprise, and AI customers.

Jean Hu, the EVP, CFO, and Treasurer of AMD, expressed satisfaction with the company’s performance in the third quarter, noting year-over-year growth in revenue, gross margin, and earnings per share. Looking ahead to the fourth quarter, Hu expects continued momentum in the Data Center and Client segments, although there might be lower sales in the Gaming segment and a softening of demand in the embedded markets.

Breaking down the quarterly segment summary, the Data Center segment revenue remained flat year-over-year at $1.6 billion due to a decline in adaptive System-on-Chip (SoC) data center products. However, it saw a sequential increase of 21% as customer adoption of 4th Gen AMD EPYC CPUs accelerated during the quarter. The launch of AMD Instinct MI300A and MI300X GPUs is expected to support deployments with leading HPC, cloud, and AI customers in the fourth quarter.

In the Client segment, revenue reached $1.5 billion, marking a significant 42% year-over-year increase driven by higher Ryzen mobile processor sales. Sequentially, revenue grew by 46% due to increased sales of AMD Ryzen 7000 Series CPUs. The Gaming segment, on the other hand, experienced a decline of 8% year-over-year with revenue reaching $1.5 billion, primarily due to a decrease in semi-custom revenue. Sequentially, revenue declined by 5% due to lower semi-custom sales. The Embedded segment revenue stood at $1.2 billion, down 5% year-over-year due to a decrease in the communications market. Sequentially, revenue decreased by 15% due to an inventory correction at customers in several end markets.

AMD also highlighted some recent PR highlights, including the growing cloud adoption of AMD EPYC processors and the expansion of their 4th Gen EPYC CPU portfolio. They also made significant progress in powering pervasive AI across various platforms and announced the acquisition of open-source AI software expert Nod.ai and AI software leader Mipsology.

Furthermore, AMD expanded its AMD Ryzen processor lineup with the launch of the AMD Ryzen Threadripper PRO 7000 WX-Series and Ryzen Threadripper 7000 processors, as well as the AMD Ryzen 5 5600X3D processor. The company’s adaptive and embedded computing products also made strides in key markets, such as radiation-tolerant space-grade compute solutions and new graphics processors and software features for gamers and professionals.

In terms of corporate responsibility, AMD published its annual Corporate Responsibility Report, highlighting its progress in digital impact, environmental sustainability, supply chain responsibility, and diversity, belonging, and inclusion.

Looking ahead to the fourth quarter of 2023, AMD expects revenue to reach approximately $6.1 billion, with a non-GAAP gross margin of approximately 51.5%. This represents a year-over-year growth of around 9% and a sequential growth of approximately 5%.

Overall, AMD’s strong performance in the third quarter and its positive outlook for the fourth quarter reflect the company’s continued growth and success in the semiconductor industry. With its innovative products and strategic acquisitions, AMD is well-positioned to capitalize on the increasing demand for advanced computing solutions.

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Background Information

About AMD: AMD, a large player in the semiconductor industry is known for its powerful processors and graphic solutions, AMD has consistently pushed the boundaries of performance, efficiency, and user experience. With a customer-centric approach, the company has cultivated a reputation for delivering high-performance solutions that cater to the needs of gamers, professionals, and general users. AMD's Ryzen series of processors have redefined the landscape of desktop and laptop computing, offering impressive multi-core performance and competitive pricing that has challenged the dominance of its competitors. Complementing its processor expertise, AMD's Radeon graphics cards have also earned accolades for their efficiency and exceptional graphical capabilities, making them a favored choice among gamers and content creators. The company's commitment to innovation and technology continues to shape the client computing landscape, providing users with powerful tools to fuel their digital endeavors.

Technology Explained

CPU: The Central Processing Unit (CPU) is the brain of a computer, responsible for executing instructions and performing calculations. It is the most important component of a computer system, as it is responsible for controlling all other components. CPUs are used in a wide range of applications, from desktop computers to mobile devices, gaming consoles, and even supercomputers. CPUs are used to process data, execute instructions, and control the flow of information within a computer system. They are also used to control the input and output of data, as well as to store and retrieve data from memory. CPUs are essential for the functioning of any computer system, and their applications in the computer industry are vast.

EPYC: EPYC is a technology designed by computer chip manufacturer AMD for use in the server and data center industry. It was introduced in June 2017 and features an innovative design to improve performance and power efficiency. EPYC processor technology is based on an innovative 14nm processor architecture, allowing up to 32 high-performance cores in a single socket. This allows for more efficient processing power, increased memory bandwidth, and greater compute density. EPYC is now widely used in the data center and cloud computing industry and provides benefits such as greater scalability, increased resource efficiency, and advanced virtualization capabilities. Additionally, EPYC technology is used in data intensive servers like server farms, gaming, and virtualization platforms. EPYC ensures that even with large deployments in multi-processor environments, power consumption and performance levels are optimized to ensure maximum efficiency.

SoC: A System-on-Chip (SoC) is a highly integrated semiconductor device that encapsulates various electronic components, including processors, memory, input/output interfaces, and often specialized hardware components, all on a single chip. SoCs are designed to provide a complete computing system or subsystem within a single chip package, offering enhanced performance, power efficiency, and compactness. They are commonly used in a wide range of devices, from smartphones and tablets to embedded systems and IoT devices, streamlining hardware complexity and facilitating efficient integration of multiple functions onto a single chip.